Truck Topics
An Expediting Overview: 2002 - 2003
Well, the New Year is here, and there are a number of those in the expediting business who are happy to see the last of 2002.
For many expediting owner/operators and drivers, the past year was one of peaks and valleys. Freight levels in the first half of 2002 did not meet expectations, although the economy showed signs of life in the second half.
Fortunately, expediting did not experience the widespread economic woes of conventional trucking, at least for the expediting companies. All of the major expedited carriers survived in 2002, with some reporting a very good year.
Reports from expediting owner/operators and drivers however, did not portray quite as positive a picture. Surveys of the single owner/operators and some small fleet owners told a story of reduced revenue and long waiting periods for the next load. A number of entries on the Expediters Online.com Forums had a common theme: "Where's the freight?"
It will come as no surprise to the struggling owner/operators in expediting, but the problems of this industry are typical of those in transportation in general.
According to the National Motor Carrier Directory, 2002 saw a reduction of around 5,000 US-based trucking companies from the year before. In addition to the closures of those thousands of companies, the past year was one of mergers and buyouts, with the deeper-pocket firms acquiring those unable to survive in these shaky times.
Among the wave of bankruptcies and shutdowns in trucking was one of the best-known names in the trucking industry, Consolidated Freightways. CF was the largest carrier ever to declare bankruptcy, resulting in the loss of jobs for more than 15,000.
The failure of Consolidated Freightways however, positively impacted many LTL carriers who were able to raise their rates with shippers concerned about fleet capacity
The truck-manufacturing sector did not enjoy a very good year, that is, until the federal deadline for lower-emissions engines approached. That appeared to encourage a buying spree that helped salvage at least part of the year.
In 2002, the Department of Transportation implemented new, more stringent rules for companies to get into the trucking business. The new regulations were not intended to stifle competition, but to ensure that companies understand the requirements for legal operation.
Other trucking stories of this past year included:
The move to the new October deadline mandated lower-emission diesel engines. A Report from the AAA that showed that cars are more often likely at fault in truck/car crashes. The on-going issue regarding Mexican trucks entering the US; President Bush lifted the ban in November. Road Check 2002 showed improvement over the previous year with fewer trucks being placed out of service due to safety violations. The Teamster/UPS contract agreement that prevented a strike against the parcel-delivery company. The newly tightened Federal regulations for CDL holders. The West coast's port shutdowns and re-openings. The dip in heavy truck sales after the October engine emissions rules kicked in. Truck driver Ron Lantz aids in the capture of suspected Washington, DC-area snipers at Maryland rest area. Teamsters settle 3 year-old strike against trucking company Overnite.The outlook for 2003.
The DOT is about to issue a new proposal to reform the federal hours-of-service regulations, and analysts believe that it will be a major improvement on the agency's much-maligned, previous attempt.
The new Republican-controlled Congress is thought to be more sympathetic to business, and that should mean good things for trucking.
The analysts' projections
At the American Trucking Association meeting in October, trucking analyst Martin Labbe predicts that the economy will improve in 2003, and that rates will increase. He went on to say that because so many carriers and owner-operators in trucking have left the business recently, "there are fewer chickens chasing the same kernel of corn."
Stock analyst Donald Broughton told the group that trucking companies are focusing on utilization and higher rates, not increased capacity.
Labbe and Broughton said pay would go up as carriers compete for a smaller pool of drivers and owner-operators. Labbe predicted driver wages would increase 25 percent by the end of 2004.
As Tom Kretsinger, head of the Truckload Carriers Association's Independent Contractor Division, told TCA this fall: "Owner-operators are more in demand than ever before."
That's good news for conventional trucking, now what about expediting?
While few in expediting are painting a glorious business picture for 2003, a sense of cautious optimism seems to exist with the carriers and owner-operators surveyed. The small business-people and drivers in the industry have taken note of the economists' projections for this year, and are hoping those forecasts are correct; some even plan on upgrading equipment in 2003 - a serious commitment, even in the best of times.
At this early point in the New Year, a major concern seems to be the possibility of a Middle East conflict and it's effect on an economic recovery. It has been projected that a war of short duration would not impact trucking or expediting, but that a protracted conflict could stimulate manufacturing in the area of the re-supply chain.
A Middle Eastern war would result in tighter security within our own borders as well. The issue of border crossing times in 2002 was an area of concern for some of the carriers surveyed, and heightened security at the US-Canadian border is a certainty.
Some of the carriers indicated a diminishing reliance on automotive-type freight and a move towards other, more profitable areas of expediting.
Unfortunately, diesel prices were not kind to trucking. The average price of fuel is currently in the range of 33 cents per gallon higher than last year at this time.
FROM THE CARRIERS
Spencer Squire
President
All State Express
This past year was pretty good for our company. I would have to describe the business patterns in 2002 as being "week to week." In the last part of the third quarter and on into the fourth, for example, August, September and October were good with December showing a slight reduction.
In 2002, we experienced a shaky economy with job layoffs, but we were happy to maintain our levels. We had a lot of West coast runs with inbound and even outbound freight. Happily, automotive freight was busy this year for us.
We are expecting a good 2003, we don't foresee a slow time in first quarter. We're now adding tractor-trailer teams and straight truck teams. We intend to double our fleet size in the coming year.
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Mark Heiges
Contractor Development
Bolt Express
We were happy to experience some real growth in a bad economy this past year. Interestingly, parts of 2002 seemed to be reversed in comparison with other years. This year, July was busy, while other months that are traditionally active, were slow.
We also noticed somewhat of a reduction in longer mileage loads; it would appear that shippers have been cutting back a little in using expediting as they normally would.
We hear that the first quarter of 2003 is going to be very busy, and we're looking forward to that.
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Jeff Robles
Terminal Manager
Diamond Delivery Service
In 2002, freight did not reach the levels we expected, and I attribute that to our uncertain economy. As a matter of fact, the quarters were "messed up"; that is, the traditionally busy times were slow, and the opposite was true for the traditionally slower quarters.
In 2003, Diamond Delivery is looking for a turn around. We see opportunities for new business and accounts. If a conflict does arise in the Middle East, it would positively impact expediting, while at the same time result in tighter security.
Something we have noticed over the recent months is that the quality of drivers has improved. Also, the professional drivers in this business want security, fairness and to be able to run at a competitive rate.
Along those lines, I think the carriers in this business have to re-examine their rate structure.
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Brent Groh
President
Elite Expediting
We found that 2002 started off slow as the effects of 9-11 lingered on. However, freight volumes increased steadily through out the year. We have exceeded 2001 revenues and expect 2003 to be a banner year as well.
The two biggest concerns going into 2003 are fleet capacity and insurance rates. In order to combat the capacity problems, we have joined 40 other expedite carriers to form an "Expedite Alliance" with a shared fleet capacity exceeding 900 units. Using a common Internet based software program, we can share load or vehicle availability information, turning every call in to revenue.
Additionally, the Alliance is looking in to group purchasing of insurance and fuel in order to take advantage of volume discounts.
However, this does nothing to combat the issue of a dwindling supply of drivers or to help recruit new individuals into the business. Better working conditions and higher revenues are needed in order to keep equipment on the road and out of the bailiff's hands.
Lastly, as a Canadian based carrier who primarily hauls cross border freight, the logjams at customs is the last major concern. With waits of up to 3 hours to clear a load, on time service is being made to suffer. Drivers are becoming frustrated with the waiting time expended (usually without compensation) and the treatment they receive by both the Customs Officers and the Brokers.
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Mike Welch
President
Express-1
We see moderate growth this year in the expedited industry. There are two significant reasons in our opinion; they are the continued trend to lower inventories and reduced capacity of expedited equipment.
Also, we are optimistic that the 3rd quarter of 2003 will be much stronger than 2002. Another bright spot is that we are seeing signs of rate increases for the first time in years!
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Virginia Albanese
Vice President, Service
FedEx Custom Critical
Overall, 2002 was a good year; in September, October and November, our recruiting department was able to augment our fleet with the right-sized trucks for our customers' needs. Because of their efforts, we've been able to field a great mix of trucks and a great group of contractors.
In expediting, we haven't been noticeably affected by truckload industry events like the CF closure, but I believe we did benefit from the dock strikes in California.
An important change that FedEx Custom Critical implemented in January 2002 was changing the Out-Of-Service policy regarding refusals. We now look at the overall picture regarding the contractor's trends and patterns. We no longer take a driver OOS merely for refusals.
Our fleet over the last two years has accrued great numbers in the areas of availability, in-service time, load acceptance and safety. Our contractors are doing a great job!
We're watching 2003 carefully; our main goal is to keep the right size power units in our fleet to better service our customers.
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Chris Shepard
Vice President
Hollingsworth Expedited Lane Partners (HELP)
Happily, we experienced growth in 2002 and hopefully, we'll also see that same growth in 2003.
During this past year, we made some significant changes regarding one of our long-term customers. We made a difficult decision when we decided to sever ties with this major account, but the simple fact was that we could no longer profitably transport that company's freight. Because of the sheer size of that account, we had been forced to turn away other high-paying customers.
Some of the changes for this coming year include cost cutting where necessary, but at the same time, employing quality initiatives. We may not grow significantly revenue wise, but we will increase our profitability.
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Housworth Trucking and Leasing
Year 2002 was generally successful for our leased truck operators and us. At the beginning of the year we had some empty trucks but our inventory of forty trucks have all been operating since March. Loads have been plentiful with all the carriers, even the smaller ones.
Profits for our operators and us would have been even better if discounted freight and deadhead miles were reduced. Even with increased job costs for mechanical work necessary on the road, we were able to hold repair expenditures at a reasonable level by our aggressive in-house preventative maintenance program.
We expect that 2003 will be a good year for expedited freight with even more load offers than in 2002. The readiness for a possible war and increased plant production should be a stimulus. Increased profits by our leased truck operators will be determined by accepting offered loads only if they are to be profitable and by chasing the freight when necessary to avoid sitting in slow layover locations.
As owners of our fleet of trucks, we will continue to do preventative maintenance to avoid breakdowns on the road. Inspection of hoses, belts, batteries, etc. and stocking each truck with these spare parts and spare alternators has proved to be profitable for us. Again, we look forward to a good year in 2003.
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Darin Mark
Director of Recruiting
Landstar Express America
We had a record year in 2002. We experienced good solid revenue numbers. Our fleet size stayed the same, but that's OK.
We look for good things in 2003, i.e., we're adding more express centers, increasing our fleet, etc.
Over the past couple of years, the industry has seen some things we've never experienced before. I feel for the owner/operators who have had to put up with the extra expenses of doing business, and I hope there will be some relief for them in this New Year.
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Danny McPherson
Vice President, Operations
Nations Express
We just ended with our best year ever! Business has been very strong and, moving into the New Year, we have more trucks moving freight than ever before.
Nations Express has 22 offices nationwide that secure and dispatch freight for our company and I think that one of the reasons for our volume is that we are a multi-service freight hauler.
Some things we noticed this past year:
*July was better than ever. Although we don't haul much automotive freight, it's typical to experience a slowdown at that time. Happily, we didn't experience that slowdown this year.
*Freight picked up quicker than ever after the first quarter of 2002.
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Dan Sokolowski
President
Panther II Transportation
In 2002, Panther II experienced explosive growth over the previous year and we're looking forward to a fantastic year in 2003 and forecasting even greater growth.
I feel this is due to two major factors:
1. Because of the number of truckload carrier bankruptcies in 2001 and 2002, this has presented opportunities for carriers like us with our equipment availability.
2. We have tried to look ahead, and we have concentrated on market diversification by offering a variety of transportation services. We are expanding our customer base in other segments of our economy
During this past year, we are just now starting to see our efforts bear fruit.
This coming year should be an exciting time for expediting in general and for Panther II in particular! One of the new things for 2003 is the innovative web site for the owner/operators that will allow them to access a wide range of information.
This web-based management tool for the contractors is part of our on-going in-house computer upgrades and enhancements that will enable us to manage the contractors more effectively by reducing deadhead and empty miles.
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John Mueller
Driver Services and Safety Director
Seagate Transportation
Actually, we have a little different situation than that of expediting - we have too much freight for our trucks. For example, we haul many refrigerated loads, and sometimes we are overwhelmed by the demands of our customers. I come from an expediting background and it's nice to be too busy.
I expect January and February to be slow, just like in expediting.
The trucking industry is in a state of flux, as witnessed by the demise of carriers large and small. We hope the forecasts of a better 2003 are accurate, we'll just have to wait and see.
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Steve Ouellette
Director of Recruiting
Thompson Emergency
The year 2002 was a good year for Thompson Emergency we have no complaints.
One developing trend of this past year was that customers are demanding more service in relation to keeping tabs on their freight through tracking.
I feel that the freight will be there in 2003, however, there will be more stringent requirements for the US-Canada border crossings.
Depending upon the zero financing programs, car sales could be strong in the New Year. I expect to see major realignments by the trucking companies and also increased company registration with the FAST program.
The New Year will also be a good year in recruiting for our company. We're presently looking for owner/operators anywhere east of the Mississippi, in sizes from cargo vans to 24-foot straight trucks.
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Mark Crawford
CEO
Tri-State Expedited Service, Inc.
In 2003 we will see shipment size and length of haul continue to increase, which in turn increases the demand for straight truck and tractor teams.
Tri-State will continue westward expansion and seek new markets to balance freight lanes.
We believe that the trend of more non-automotive runs will continue in 2003.
Greater emphasis will be placed on Owner Operator programs to increase retention of the fleet.
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Mary Kay Cummings
Operations Manager
Try Hours
We were at about the same levels as last year, maybe a little better. One trend we noticed is that the runs seemed to be shorter mileage in nature. The business slowed down a little earlier than it should have.
Try Hours is not a primary auto carrier, but it is likely that those shipment types are down because of the economy. It would appear that shippers are seeking alternatives to expediting when they can by using LTL-type carriers.
For 2003, the experts seem to believe that the economy will pick up.
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FROM THE OWNER/OPERATORS
Carroll and Dora Bean
D Unit
White Glove Services
FedEx Custom Critical
We actually did well, better than last year. We do a lot of military work and I think those runs were up over last year. We don't do much automotive freight, so I can't address that.
Those military loads are not as immediate as other freight, but one must adhere to a schedule and they require more special handling. The runs were becoming slightly longer in mileage.
For 2003 - I'm waiting to see what happens in the Middle East. We've been with the company since the time of Desert Storm. We don't picture a slow down. I'm not much of an economist, so I don't keep track of it - I try to listen to the experts.
I have concerns about NAFTA and it's effect on the economy. I'm also concerned with the Mexican drivers and what their presence in this country holds for the industry.
From what I've seen, FedEx CC is the best place to be; the people in Akron have worked very well with us.
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Tony "Teacel" Celender
Owner
Pittsburgh Express
Over the last year, I've had a lot of drivers from all types of trucking ask me about expediting. People are looking for a change; they're looking to downsize and lower their overhead. I try to give them as much insight as I can.
I have been acquiring new accounts with the average run miles between 500 and 700 miles. I'm looking for experienced expediters. Whereas I might not offer the same cpm, I can offer them guaranteed work and home time after their load.
I try to stay away from on-demand type of runs; I try to stay with dedicated loads. That way I don't have unhappy drivers sitting around.
Piggybacking or combining freight from different accounts can be profitable as well as an extra service we provide. We go in to the customers' facility, make up their delivery schedule, package their outgoing freight and, of course, deliver the freight. I charge a few cents per mile extra, but the customers really like the additional service.
We expect 2003 to be an even more profitable year, because my company's name is getting around. I'm able to show the customers ways to save money and we've been getting a lot of calls.
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Ben and Melanie Easters
Tractor-Trailer
Panther II
This past year has been good; I think we've made it pretty well. Our income was just a little reduced this year because freight didn't match up to projections.
We had transmission and clutch trouble this year, but the repairs seem to have taken care of the problems. July and August were actually better than projections, but we were home then, working on truck.
We're looking for even better things in 2003.
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Matt and Katy Foscue
D Unit
White Glove Services
FedEx Custom Critical
This year was better than last; we worked a little less and made more in 2002
We saw an increase in temp-controlled freight; it's picked up. It's been hit or miss at times, and we network with other White Glove Services drivers to compare notes. It seems that we all have to have one or two big loads to keep the month's revenue at a reasonable level.
We talk to friends who are having a terrible month, but then that one run really gets them back up to a decent total for the month.
Our operating philosophy is that we hope for the best, but prepare for the worst. We don't want to be left high and dry like when I hear drivers talk about how it was in 1995. We feel that some important keys to this business are location, luck of the draw and being where the company needs you to go.
We're trying to stay ahead of the truck payments, and with FedEx Custom Critical's driver Extranet, we can keep up with our numbers.
Next year we should do better, but we plan to work more. As we learn more about the business, we work smarter. We will try to increase our load acceptance and availability.
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Stacy Green
B Unit
Tri-State Expedited Service
For me, 2002 could have been better, but still, it was not too bad. I was on a dedicated run for just about half of the year, and I'm still re-acclimating to express-type runs.
I noticed that between the beginning of September and Thanksgiving, it was slower.
For 2003, I feel the economy needs resolution; everyone is extra cautious watching for war signs. If economy increases, so will our run count.
I feel the companies are overstaffing which results in a lot of people sitting. The companies say that they're turning down freight, but I don't see it. We need quality freight, not quantity.
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Scott Hancock
D Unit
Express-1
Since August, I've noticed a real decline, around 30%. I've been doing enough to tread water. Unless you watch the expenses, business conditions could put an owner under. The name of the game is survival.
There's a fine line between break even and putting money in the bank. I'll see it through, though. This might be the house cleaning that expediting goes through occasionally. It removes the vacationer from the true expediters.
I still have a passion for the business and I'm hoping it will pick up in April of next year; I'm thinking things will go through the roof.
I had been considering a new truck for 2003, but the market will have to prove it to me.
We saw in 2002 when Consolidated Freightways went under that there is a large amount of LTL freight out there and I think expediting carriers should look into that. That can mean new revenue streams.
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Spence and Nancy Kennedy
D Unit
Con-Way NOW
We had an OK year in 2002 even though we had substantial out of service time due to medical reasons. Nancy was out of the truck for 4 months.
Being retired, we're not living paycheck to paycheck, so it makes it easier to make the payments.
Economy looks good to me for this coming year. Things have been rocky, but it's crazy to blame everything on 9-11 and not management. Yes, the economy is slow right now, but consumer spending is still steady and interest rates are low.
Con-Way's business has remained steady. Canadian freight is real strong and it seems like there's more freight going west. I think Con-Way is on the path to serious growth and they are adding services. We've been very happy with the company.
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George McDonald
C Unit
FedEx Custom Critical
I did better than last year, even though I ran the same miles as last year. It came out to 18 more runs than 2001. The biggest trend for me was that freight was steady
One of the most lucrative periods I had in 2002 was over the space of 1 weekend when I did a run every 4 hours. I happened to be in the right place at right time.
I have been surprised that we haven't had more military freight movement in expediting, considering the Afghanistan situation.
I'm picturing more of the same in 2003. I think it will be steady with moments when freight will be hot and heavy.
I recently ran some numbers and I found that in my 10 years in expediting, I have averaged one run every 1.5 days.
This year, I was available 300 days and totaled 179 runs.
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Rich and Mary Moore
D Unit
White Glove Services
FedEx Custom Critical
This past year was a little rough; our revenue was down by 15 percent. This was not all due to the economy, but we did have some medical problems so that reduced our time on the road.
Fortunately, we experienced no breakdowns or mechanical problems, and still managed to rack up 100,000 miles.
Got to Oregon for the first time, the only state I had never been to. We went out of service, rented a car and toured for 4 days.
I have noticed an onslaught of new expediting carriers over this year. Their overhead is much lower, but for most, they don't have the contacts to secure backhauls.
Also, we're starting to see more Class 8 platform straight trucks and I'm curious as to how they can afford it. We met a couple recently with a $144,000 truck and we wonder how they pay for it.
If we do go to war in the Middle East in 2003, I think that once it's behind us, I see the economy recovering. Otherwise, I feel things are in doubt.
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Terry and Renee O'Connell
B Unit
FedEx Custom Critical
We were very disappointed in 2002 , particularly the latter half. We anticipated an upward turn in freight, but it turned out to be much less than in years past.
It's probably been one of our worst years financially; our run offers have been substantially down. Layover times have increased for us.
To borrow a phrase, "It's the economy, stupid." In addition to the slow economy, there is increased competition from the small companies out there.
I would be very worried if this were my primary source of revenue. I see next year as being a time of taking a real close look at this business. We must evaluate the time and energy we put into this business.
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Glen and Janice Rice
C Unit
White Glove Services
FedEx Custom Critical
This year has been better than we had ever imagined. We met and exceeded our goals. We worked harder than we thought we would have to. There was not much time for sightseeing. We feel that we're contributing more to the nation than we did just as truckload hauling.
Janice says that this was a real leap of faith for us to get into this truck, but the rewards keep coming back to us. This past week we had a total of one hour when we weren't under load. In 2002, we've been from Nova Scotia to Washington State, so we've covered some miles.
I feel that the extra, specialized equipment has been a plus. I think the industry is headed in the direction of extra equipment such as lift gates, temperature control, etc. We know some other folks with special equipment who have also done well in 2002.
I think this industry needs to re-evaluate itself as far as truck appearance. We've noticed some dirty trucks, trucks with bad tires and other equipment, etc. I've seen trucks from major carriers behind the scale houses and the owners had been tagged with Out-of-Service violations. I've been told by DOT-types that they are going to be targeting expediters.
In 2003, we're expecting a 10 percent increase in business, but we'll see how it goes. We just go along with what the company needs. We have around a 95 percent acceptance rate.
I have to say that we are tired, and we need a break.
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Pat Smythia
Owner
Freedom Express
Our revenue was up 10 percent this year. We have 8 trucks; 1 with Tri-State and 7 trucks leased with Panther II. I added 4 trucks this year, and happily, Panther II kept my trucks running.
We had the best first quarter this year that we ever had. I don't think that expediting is necessarily subject to some business conditions that effect other segments of transportation.
My theory is that so many people have left the business, there's more freight for those who stick with it.
We are forecasting growth of 15-18 percent next year, and I have plans to add 2-3 more trucks.
I'm seeing more contractors moving to class 8-sized trucks, and I think people are becoming more confident about the business.
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Linda and Larry Stanfield
D Unit
Con-Way NOW
Linda and I had a great year and we really have no complaints. The company kept us real busy this year; we did 207,000 miles, about 25 per cent over last year.
As a matter of fact, the company says that they are up 20 per cent over last year. We sat very little this year.
With so many trucking companies going out of business, more shippers are looking at expedited freight, especially when they're looking to get their freight moved fast.
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Bob Worthington
B Unit
Panther II
Overall, 2002 wasn't too bad, but it's not as good as it used to be. Out of 2002, October was slow.
I'm more likely to take a short run when it's busy, than when it's slow. If I know that I'm only going to get a couple of runs a week, I'll refuse those short loads.
For 2003 - If we go to war, business will probably increase. The only problem I see with this business is overstaffing.